Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
The transportation and logistics industries have been in perpetual consolidation for decades. Companies come and go. Some are acquired. Others fade away. Inevitably, new entrants take their place, especially in non-asset-based sectors like third-party logistics (3PL), where the barriers to entry are relatively low.
Though nary a year goes by without a thinning of the ranks, 2015 was an extraordinary time for large-scale shrinkage. According to consultancy Armstrong & Associates Inc., there were 11 $100 million-plus transactions in 2015 that involved third-party logistics providers, the most in one year since Armstrong began tracking deals in 1999. By contrast, there were just three and five such transactions in 2013 and 2014, respectively, according to Armstrong data.
FedEx Corp. and UPS Inc., two of the world's most high-profile transport and logistics firms, made the largest acquisitions in their histories in 2015. Memphis-based FedEx acquired Dutch-based rival TNT Express for US$4.8 billion. Atlanta-based UPS, which tried unsuccessfully to buy TNT Express in 2013 for US$6.8 billion, acquired Chicago-based freight broker Coyote Logistics LLC for $1.8 billion. FedEx also closed on its purchase of Pittsburgh-based contract logistics specialist Genco Supply Chain Solutions for an undisclosed sum—one analyst pegged it at about $2 billion—a deal that represented FedEx's biggest commitment ever to a firm in the non-transport segment.
The 2015 activity, which in some cases bore the fruit of the seeds planted as far back as early 2014, stands in stark contrast to the M&A torpor that existed between 2008 and 2014. That period included the financial crisis and so-called Great Recession, a time when many companies were focused on survival rather than growth. Yet industry CEOs stayed out of the M&A game even as U.S. and world economies recovered, albeit tortuously.
Robert C. Lieb, professor of supply chain management at Boston's Northeastern University, who conducts an annual survey of 3PL CEOs, said respondents to his 2014 survey believed that post-acquisition integration challenges were too daunting and potential acquisitions insufficiently accretive to justify an aggressive buying strategy.
That attitude seemed to change in 2015. Perhaps it was the slowdown in demand for virtually all transportation services—while 3PL demand continued apace—that pressured some CEOs into achieving top-line growth through acquisition instead of through organic measures. If that is the case, then M&A activity may be extended well into 2016. For example, sluggish demand and ample truck capacity have forced many truckload carriers to ratchet down forecasts for increases in base prices to 1 to 2 percent (from 3 to 5 percent). Rate compression, combined with rising costs for drivers, power units, and trailers, could put further pressure on organic revenue growth.
"Capacity remains loose and pricing for carriers is weak," said Ben Cubitt, senior vice president of consulting and engineering for Transplace LLC, a large Frisco, Texas-based 3PL. Cubitt said earlier this week that he finished three bid reviews before Christmas and that "all showed strong savings."
Evan Armstrong, Armstrong & Associates' president, said M&A volume would stay strong during 2016, though there will likely not be as many megadeals. He also noted that XPO, whose four-year buying spree has made it the talk of the industry, would be off the acquisition grid next year as it digests the Con-way acquisition.Brad Jacobs, XPO's chairman and CEO, said as much at an industry conference this past fall.
Armstrong also delivered some words of caution for prospective acquirers: A recent survey of 3PL customers found that large providers with $10 billion or more in annual gross revenues—revenues before the costs of purchased transportation—rate lower in customer service, value/pricing competitiveness, and process improvement capabilities than do providers with less than $1 billion in gross revenues. "There is a feeling that very large 3PLs need higher pricing to support their vast organizations and tend to be less proactive in identifying customer process improvements," Armstrong said in an e-mail. He added that service disruptions that often plague post-merger integrations could be a factor in the perception gap between small and large providers.
Armstrong noted that 56 percent of the respondents are trying to shrink their provider universe. "However, reductions due to acquisitions are not an optimal way of selecting your core 3PL group," he said. Armstrong said the continued consolidation among large players will "put more pressure on organizations to properly evaluate and select 3PLs which meet their needs."
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”